As a small business owner, you have a responsibility to provide a safe work environment for your employees. Unfortunately, in spite of precautions and training, accidents can happen. Those accidents are what workers’ compensation laws are in place to address.
Below is an overview of what workers’ compensation is, what it covers for employers and what the employer’s responsibility is when it’s responding to employee claims of injuries or illness.
What Is Workers’ Compensation?
Workers’ compensation is a program, governed by states, that requires employers to purchase insurance to cover the cost of employee injuries or illness. Employees will receive benefits regardless of who is at fault, and employers are protected from lawsuits by employees seeking compensation for pain, suffering or mental anguish.
Each state has the right to govern workers’ compensation in its own way, but for the most part, systems are very similar from state to state. To learn about your state’s workers’ compensation details, check out this link to different state government websites.
What Does Workers’ Compensation Insurance Cover?
Worker’s compensation covers injuries and illnesses that are job-related. It’s important to remember that injuries and illnesses covered by workers’ compensation insurance do not have to be suffered on the job site. For example, if an employee is injured while traveling to a business function, this would be covered under workers’ compensation.
Also, workers’ compensation covers sudden injury or illness (e.g. a fall), as well as long-term injury or illness, such as repetitive stress injuries (e.g. carpal tunnel syndrome), lung disease or other injuries relating to on-the-job exposure to hazardous materials.
What Doesn’t Workers’ Compensation Insurance Cover?
Not all injuries incurred in the workplace are covered by insurance. Workers may be denied benefits if the injury or illness is sustained in any of the following instances:
- Injuries caused by intoxication or drugs
- Self-inflicted injuries
- Injuries relating from violations to company policy or horseplay
- Injuries claimed after an employee is laid off or terminated
- Injuries suffered off the job
In general, the biggest benefit to having workers’ compensation insurance for an employer is the ability to prevent lawsuits by injured employees. Historically, employee injury cases that go to court are awarded very high compensation, especially for intangible injuries, such as mental anguish or suffering. As a result, it’s better for the employer to have proper insurance to avoid this scenario. While it is still possible in select situations for employees to sue, the instances are few and far between.
What Can Employers Do to Avoid Workers’ Compensation Lawsuits?
As an employer, there are a variety of things that can be done to protect the employee, and by extension the employer and company, from workers’ compensation lawsuits. Under workers’ compensation regulations, employers are typically expected to:
- Carry workers’ compensation insurance
- Post notices and advise employees of their legal rights should an accident or illness occur
- Provide claim forms to injured employees within 24 hours of the employee reporting the incident
Claim forms should also be accompanied by documentation of how to file the claim, and information regarding what type of compensation the worker can expect once the claim is accepted.
Filing a Claim
In almost all cases, the employer is responsible for filing the workers’ compensation claim. In some instances, employees may also need to file a separate claim. Once a claim is filed, the insurance provider will contact the employer and verify that the injury claim being made is legitimate. At this point, it is up to the employer to dispute or accept the claim.
In most instances, an employer will and should accept the claim as long as the claim has been reported to the employer, and the employer is aware of the injury or illness. As an employer, you have the right to dispute the claim and the amount of compensation to be paid to the worker.
If everything appears to be valid, however, then the insurance company will work with the injured party to get the necessary documentation, including medical bills, as well as with the employer to determine the amount of wage replacement. It is up to the employer to inform the insurance company of when the worker returns to work so that the employee is not overpaid.
As an employer, making sure that you’ve acquired the proper workers’ compensation insurance protects not only your employees, but also your business.